Dax futures are currently trading above 6940, which is nice with yesterday's trades. Indicators are currently very mixed depending on the time frame, so I should be careful not to take too much bearish or bullish outlook and concentrate only short term outlook.

Even some indicators are bearish mid term, it is hard to believe in any bigger correction before we get 52-week lows. Currently we are having zero lows. Another (and likely) possibility is that the stocks are currently so highly correlated, that this kind of behaviour isn't needed.

Dax Volume Index is giving a possibility to drop above 6500.

20 day highs-lows ratio is still on the bullish side.

Dax Cycles is a little bit bearish.

6974 is still an important resistance today, and if Dax manages to climb above it then climb above 7000 should bury bear's hopes (again). Although, today's low could be near 6868, but still above yesterday's low. If today is a strong up day, some of my reliable indicators will also turn from very oversold condition, thus indicating bullish Monday. We will see.

Currently 26 companies have higher RSI reading than the actual index, which usually indicates overreaction or short term bottom. The relation has been inversed in the graph below. Looks like a potential short term trade for CBK-DBK-HEI-basket.

Wednesday, March 28, 2012

Tomorrow looks very promising for intra day long index or high beta stock trade. Beta Indicator felt below 50, which is bearish. Although, usually we have seen a rebound at this level, so the probability that tomorrow's close > today's close is 70%. The probability that tomorrow's close > tomorrow's open is even higher, 80%.

There haven't been enough negative news lately to give a good reason to sell. But it is obvious that the market is in a state that bad news would be strong sell signal. MSI is very high and trying to point down.

Dax Cycle hasn't decided wether to stay up, go down, or make a strong rebound and the fall.

Investors seem to be buying more low beta stocks at the moment.

Volume index is trying to go down ahead the prices.

Hang Seng hasn't been able to break above the declining trend line and Fibonacci at 21317. Break above that level should bring the index to 23868, but if it fails then the target is 18740.

Aud-Jpy hasn't been able to make new annual highs since last April: New highs would confirm the rise of global risk appetite.

Friday, March 23, 2012

The overall picture of a trading system looks good so far. After I get more evidence of the superior performance, I will later try to open a few elements of the system. Here I have calculated a distribution of the trades and their impact to total portfolio. For comparison, there is Normal distribution and Dax distribution with 10% money management.

Dax still has a negative divergence with RSI and MACD, which could make momentum investors cautious. Break below 6970 would confirm the divergence and lead Dax to 6600. If Dax manages to stay high, 7400 maintains as an intermediate target.

Volume index has been rising and almost climbed above July highs. We need to watch this carefully for a hint of level 7400 for Dax.

Overbought - oversold indicator resisted it's normal inertia which would have taken Dax to lower levels. Now we are back in uptrend.

Dax 20 day highs vs. lows also indicates uptrend.

McClellan Summation Index indicates uptrend.

The only negative indication is investor beta, which is currently indicating risk aversion even it is still above positive level 50.

Overview: We haven't had any major negative news issue lately, so remain cautiously positive and bullish biased.

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